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Strategies & Market Trends : Aardvark Adventures
DAVE 234.46+0.4%Jan 7 3:59 PM EST
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To: ~digs who wrote (5635)9/14/2008 3:17:45 PM
From: Bucky Katt   of 7944
 
No US warranty? The situation was rapidly evolving, and it's possible Barclays or another bidder would emerge to save Lehman before markets opened Monday. But with the government balking at putting any taxpayer money at risk for Lehman, the likelihood of a transaction was dimming. That would leave an orderly liquidation as the most likely scenario, a dramatic outcome for a once-powerful firm.

According to people familiar with the situation, a stumbling block is the request that Barclays obtain shareholder approval before it agrees to cover Lehman's contracts with other financial firms. But organizing a shareholder vote would take days if not weeks. U.S. regulators are likely to have known this, raising a question about why this provision emerged late in the talks.

The main stumbling block for any Barclays deal is a reluctance by U.S. regulators to financially back an acquisition or the creation of a so-called "bad bank" to wind down Lehman's assets.

Some people involved in the discussions say Barclays concerns could be addressed, and this was high-stakes brinksmanship. The British bank could still return and with the pressure building on the government to find a solution, a threat to not return to the talks could help Barclays' stance.

Bank of America Corp., the other leading bidder on Friday, had indicated by Sunday morning that it wasn't interested in a transaction without government support.
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